Correlation Between Lord Abbett and First Trust
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lord Abbett and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Convertible and First Trust Preferred, you can compare the effects of market volatilities on Lord Abbett and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lord Abbett with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and First Trust.
Diversification Opportunities for Lord Abbett and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Lord Abbett is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lord Abbett Convertible are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Lord Abbett i.e., Lord Abbett and First Trust go up and down completely randomly.
Pair Corralation between Lord Abbett and First Trust
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 2.92 times more return on investment than First Trust. However, Lord Abbett is 2.92 times more volatile than First Trust Preferred. It trades about 0.09 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.16 per unit of risk. If you would invest 1,214 in Lord Abbett Convertible on April 20, 2025 and sell it today you would earn a total of 384.00 from holding Lord Abbett Convertible or generate 31.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett Convertible vs. First Trust Preferred
Performance |
| Timeline |
| Lord Abbett Convertible |
| First Trust Preferred |
Lord Abbett and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and First Trust
The main advantage of trading using opposite Lord Abbett and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.| Lord Abbett vs. Western Asset Inflation | Lord Abbett vs. Ab Bond Inflation | Lord Abbett vs. Cref Inflation Linked Bond | Lord Abbett vs. Ab Bond Inflation |
| First Trust vs. First Trust Managed | First Trust vs. Franklin Templeton Multi Asset | First Trust vs. First Trust Multi Strategy | First Trust vs. First Trust Short |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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